Ericsson has reported its Q1 results for 2023, with Group organic sales flat, as expected, and EBITA excluding restructuring charges. The decline in Networks, the company said, was offset by growth in other business segments, including a 19 percent organic growth.
Commenting on the results, Börje Ekholm, President and CEO of Ericsson said, "We are on a journey to shape the future industry landscape and extend our addressable market by leveraging our 5G capabilities."
Organic sales in Networks decreased by two percent compared to last year in the same period, mainly due to customers in early 5G markets slowing deployment, but Ericsson says it is expected to pick up again as the inventory adjustment is completed, possibly spilling over into Q3.
In Cloud Software and Services, Ericsson continued to execute its turnaround strategy and reduced its loss slightly more than planned, positioning the company to reach the milestone of break-even in 2023.
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Ericsson also said that it has accelerated its cost-out execution and has identified additional savings opportunities of two billion Swedish Krona. It now plans to reduce the cost run rate by 11 billion Krona by year-end, and restructuring charges are likely to amount to around seven billion Krona for the full year, of which more than half is likely to be booked in Q2. For 2024, restructuring charges are expected to normalise to about 0.5 percent of sales.
Looking forward, Ericsson expects a choppy environment in 2023 with poor visibility, and operators are expected to remain cautious with capex investments and continue to adjust inventories in Q2. However, the company remains confident about its long-term growth trajectory in the Enterprise segment, and it expects the slower growth seen in Q1 to pick up again.
The company anticipates the first revenues late this year, positioning it for revenue ramp-up in 2024 and 2025 as its transformation into a platform company accelerates.
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